May they reject all systems and try liberty

Menu

Health care fallacies

Writing in his New York Times blog, economist Paul Krugman makes some common mistakes when talking about health care.

His piece is entitled “Why markets can’t cure health care” and he is attempting to refute the idea that less government would make health care more efficient and better for everyone.

I’m not going to dissect the whole article, but one of Krugman’s main points is this idea He writes,

“[I]nsurers try to deny as many claims as possible, and…try to avoid covering people who are actually likely to need care.”

This is a point a lot of progressives are making, usually after mentioning that insurance companies only care about profits and don’t care about people.

Well…so?

I could care less if an insurance company cares about people or not. Do you really think government bureaucracies care about you more because the government isn’t making a profit? Does the post office and DMV show more caring to you than Walmart? What makes people evil the minute they step into the profit-making world?

If Krugman’s theory is correct, then insurance companies would deny 100% of the claims filed. Is that accurate? No, in fact, only 3% of claims are denied each year. Also, Massachusetts universal health care policy turns down more people then the private insurers. (MassCare turned down 22.8% of claims versus about 5% for private insurers).

Why would these evil companies decide to fulfill 97% of claims anyways? Don’t they understand that they are losing billions in profits? The reason is simple economics…if you denied every claim, you would have no customers and your profit would be zero. Also, if you deny legitimate claims and violate your contract, you could be sued and lose millions more. Companies don’t fulfill claims because they want to; they do it because they have to.

Now, there are a few things that need to be cleared up. First of all, the government controls 50% of health care spending in the United States, and this has gone up from 10% in the 1960s. More government in health care, as well as better medicine and treatment, is what’s caused prices to skyrocket; not the free market.

Second, giving government MORE control will not help keep cost down. If we look at the states who provided universal health care themselves, it has been a disaster. Obama cites Massachusetts, and yet a study found that they were the slowest payer of health claims to doctors (taking 56 days versus 22.6 for private insurers) and had the highest denial rate of care. Hawaii’s system has also been a disaster.

Third, the government is not “competition”. Obama has said, “One of the options in the exchange should be a public insurance option — because if the private insurance companies have to compete with a public option, it will keep them honest and help keep prices down.”

This has been said repeatedly by President Obama and it makes no sense. There are thousands of health care companies, how is that not enough competition? Government “competition” does not mean competing on an equal playing field, it means getting in and setting prices. How has that worked out in the past?

Basically, the government cannot be an impartial umpire if it owns one of the teams playing and sets the rules of the game. More involvement will mean worse care, worse service, and higher costs.